Reduction first in six years as pre-crisis developments fill up, says Bayleys.
The availability of larger floor plates in the southern precincts of the North Shore, particularly Takapuna, has enabled bigger tenants to relocate there, contributing to a marked reduction in vacancies, says Daryl Devereux, Bayleys North Shore Commercial director.
Devereux was commenting on results of the latest survey of office space on the North Shore, which shows that only 11.2 per cent of office space is unoccupied - down from 14.1 per cent in 2011 and sitting just under the office vacancy rate in Auckland's CBD.
Devereux says the increased uptake in office space is mainly due to bigger tenants capitalising on the availability of space to move into their preferred locations; and smaller businesses taking advantage of favourable rents to move into larger premises to accommodate their growing business.
He says a very active owner-occupier market, particularly for offices in Albany and Mairangi Bay, is also contributing to the decline.
"This has been one of the most active sectors in the market over the last 12 months. Newer precincts further north are appealing to smaller growing businesses which are dominating the market for floor areas of between 100sq m and 300sq m, of which there are a number of options in Albany, Rosedale and Mairangi Bay.
"Well established amenities, being close to the waterfront and accessibility to Auckland's CBD have all been catalysts for companies to relocate to the North Shore."
Significant office leasing transactions that Bayleys North Shore Commercial has been involved in in Takapuna this year include Caleb Belling's leasing of an 872sq m floor at the Smales Farm Business Park in Takapuna for $278,000 per annum and the leasing by Christina Heaven of 1213sq m plus 21 car parks in Hurstmere Rd, Takapuna for $320,788 per annum.
The largest office deal completed by the firm since the middle of last year was negotiated by Belling for the lease of 2165sq m and 103 car parks at Warehouse Way in Northcote for net annual rental of $625,845.
Bayleys Research says the vacancy reduction revealed by the survey is the first in six years, with positive absorption of space beginning to counter a long construction tail in the North Shore's northern business precincts.
"The construction tail was the result of high levels of speculative development committed to in 2006 and 2007, at a time of significant business creation and expansion, along with the availability of business development land, particularly in Albany, Mairangi Bay and Rosedale," says Bayleys Research analyst Sarah Davidson.
"As the recession took hold between 2008 and 2009, the demand for new space dropped away severely and was at its worst in 2010 when businesses shed approximately 2500sq m of office space.
"Concurrently, there was newly completed space still coming on to the market, resulting in a big upward push in vacancy rates from around 8 per cent in 2006."
Davidson says newer precincts suffered the highest levels of vacancy, peaking at close to 20 per cent in 2011. However, a significant uptake by small businesses coupled with the end of the construction tail has dropped the vacancy rate to between 8.5 and 12.2 per cent for those areas.